Pacific Biosciences Hit By Sentiment, But The Future Of Long-Read Sequencing Is Strong

The shift away from high-multiple growth names in life sciences has been brutal, with many names down 50% or more over the last year. This list includes Pacific Biosciences (NASDAQ:PACB) (“PacBio”), which has dropped another 60% or so since my last write-up on this sequencing company. Although I think PacBio is in even better shape now than a year ago from a long-term perspective, the reality is that sentiment has shifted and this is the risk that goes with owning shares valued at double-digit multiples of future revenue.

Between improvements to its long-read sequencing technology and the addition of a short-read technology platform, I believe PacBio has an even stronger long-term outlook, and while there is (and likely always will be) chatter about what competitors in the space are doing, so far none have come close to PacBio where accuracy is concerned. Long-term revenue growth of over 30% is hardly a humble assumption, but I do think PacBio shares look undervalued today.

 

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Pacific Biosciences Hit By Sentiment, But The Future Of Long-Read Sequencing Is Strong